Question

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $5,140. During October, the total cash deposited was $39,175, and checks written totaled $40,520. The bank statement indicated a balance of $8,980 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: A. Checks outstanding totaled $5,560. B. A deposit of $1,050 representing receipts of October 31, had been made too late to appear on the bank statement. C. The bank had collected for Coastal Bike Co. $2,120 on a note left for collection. The face of the note was $2,000. D. A check for $370 returned with the statement had been incorrectly charged by the bank as $730. E. A check for $310 returned with the statement had been recorded by Coastal Bike Co. as $130. The check was for the payment of an obligation to Rack Pro Co. on account. F. Bank service charges for October amounted to $25. G. A check for $880 from Bay View Condos was returned by the bank due to insufficient funds. Instructions 1. Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles. 3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash? Amount Descriptions Adjusted balance Bank error in charging check as $370 instead of $730 Bank error in charging check as $730 instead of $370 Bank service charges Check returned because of insufficient funds Company error in recording note collected by bank Deposit of October 31, not recorded by bank Error in recording check Outstanding checks Proceeds of note collected by bank, including $120 interest Total adjustments

Answer 1

Bank Reconcilation Statement
	Cash Balance As Per Bank Statement	8,980.00
Add:	Deposit which was recorded late	1,050.00
Add	Bank error in charging check as 730 instead of 370	360.00
		10,390.00
Less	Outstanding checks	(5,560.00)
	Adjusted Balances as per Books	4,830.00
Bank Reconcilation Statement
	Cash Balance according to company records	$     5,140.00
Add	Bank had collected for Coastal Bike Co. $2,120 on a note left for collection.	$     2,120.00
Less	A check for $880 from Bay View Condos was returned by the bank due to insufficient funds	$      (880.00)
Less	Bank service charges for October amounted to $25.	$         (25.00)
Less	A check for $310 returned with the statement had been recorded by Coastal Bike Co. as $130.	$      (180.00)
Add	Cash deposited	$ 39,175.00
Less	Cheques written	$ (40,520.00)
	Adjusted Balances as per Books	$     4,830.00

JOURNAL ENTRY
		Debit	Credit
31st october	Cash	$ 2,120.00
	Notes Receivable		$ 2,000.00
	interest receivable		$      120.00
	Notes Received by Bank with interest, recorded now
31st october	Accounts Payable	$     180.00
	Accounts Receivable	$     880.00
	Miscellaneous expense	$        25.00
	cash		$ 1,085.00
	Cheque bounce, incorrect amount for supplier and charges recorded now

3. In Balance sheet the Adjusted Balance of $ 4,830 as calculated above will be reported as cash.